Silver surged to a new all-time high following a sharp escalation by US President Donald Trump over Greenland. Trump has threatened to impose 10% tariffs from 1 February on the UK, France, Germany and several other European countries unless the US is allowed to purchase Greenland. If no agreement is reached, the tariffs could increase to 25% starting 1 June.
Such tariff threats have historically supported precious metals amid rising stagflation risks. High tariffs commonly lead to slower economic growth and higher inflation – conditions that tend to benefit silver prices.
Market participants are closely watching for what traders call the TACO (“Trump Always Chickens Out”) trade. The current focus on this trade war escalation means that monitoring new developments will be crucial, offering potential trading opportunities.
Risk sentiment is likely to remain cautious until there are clear signs of de-escalation from Trump. Should tensions worsen, silver could experience further strong rallies. Conversely, if Trump backtracks on his threats once again, silver prices may retreat to previous levels.
Technical Analysis
Daily Chart
Silver’s climb to a new record high is visible on the daily chart following the Greenland-related escalation. For risk management, buyers might find better risk-to-reward opportunities near the trendline before positioning for further gains. A significant pullback would likely require either easing of tensions or robust US economic data.
4-Hour Chart
On the 4-hour chart, silver has consolidated near its recent highs as traders waited for fresh catalysts. The recent development provided a boost, but buyers will seek a clear break above the key resistance at 94.00 to increase bullish positions targeting new highs. Sellers are likely to act around this level, with a well-defined risk above the peak and a target near the 86.50 support.
1-Hour Chart
The 1-hour chart shows a potential bullish flag pattern forming at resistance. Buyers will want to see an upside breakout to commit to a rally toward new record highs. Alternatively, sellers will watch for a downside break to strengthen bearish bets aiming for the 86.50 support. The average daily price range is indicated to aid intraday risk management.
Upcoming Economic Data and Events
Traders should note the weekly US ADP employment report tomorrow, followed by US Jobless Claims data on Thursday. Friday will bring the US Flash PMIs. Additionally, market attention remains focused on any new headlines or posts from Trump on Truth Social concerning Greenland, as these could heavily influence trade sentiment.
Original Source: Giuseppe Dellamotta of InvestingLive.com
